Mastercard to invest R795 million in Africa's Jumia

Ahead of the company's IPO in New York.

Jumia Technologies said that Mastercard has agreed to invest €50-million (R795-million) in a private placement ahead of the African e-commerce company’s planned initial public offering (IPO) in New York, according to a report by Bloomberg.

The move by the U.S. credit-card giant will see it join shareholders such as French drinks maker Pernod Ricard SA, which bought a 5.1 percent stake for $84.2 million in December, and largest investors MTN Group and Rocket Internet SE.

According to Bloomberg, the move by Mastercard increases the chances of a successful share sale for loss-making Jumia, which has about 4 million customers across 14 African countries. 

Mastercard also agreed to a new partnership to help Jumia grow its operation, in line with its strategy of growing its presence in the African continent.

The IPO of Jumia, which was founded in 2012 to offer online shopping, logistics and payment services, could value it at $1.6 billion or more.

The company said its business is expanding, and the continent’s development will make it a better market, with a growing young population, more infrastructure investments, urbanisation and rapid economic growth.

In December, Jumia was valued at 1.4 billion euros ($1.6 billion) with shares at 14.74 euros, according to the filing. Jumia, which now counts Nigeria as its largest market, makes money both selling its own products, and taking a cut from third-party sales. In 2018, revenues were 130.6 million euros, up from 94 million euros the previous year.

However, losses also rose, from 165.4 million euros in 2017 to 170.4 million euros in 2018. By the end of December, accumulated losses were 862 million euros, the firm said.

Jumia’s active users, people who buy something at least once in the past year, increased to 4 million at the end of last December form 2.7 million a year earlier.